If the Fed Wants to Discourage Bank Lending, Then It

question 83

Multiple Choice

If the Fed wants to discourage bank lending, then it should ________ the required reserve ratio on checkable deposits.

• A)lower
• B)raise
• C)maintain at a constant
• D)the Fed cannot change the required reserve ratio

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Definitions:

Inputs

Resources used in the production process to produce goods or services.

Production

The process of creating goods or services using inputs such as labor, materials, and technology.

Spreading Effect

refers to the phenomenon where the impact of a particular event, policy, or action extends or disperses across a wider area or population.

Diminishing Returns

An axiom indicating that beyond a certain level, additional investments in a given domain will not yield proportionally higher returns unless other variables are adjusted.